Defend Trade Secrets Act of 2016

(This measure has not been amended since it was reported to the Senate on January 28, 2016. The summary of that version is repeated here.)

Defend Trade Secrets Act of 2016

(Sec. 2) This bill amends the federal criminal code to create a private civil cause of action for trade secret misappropriation.

A trade secret owner may file a civil action in a U.S. district court seeking relief for trade secret misappropriation related to a product or service in interstate or foreign commerce. The bill establishes remedies including injunctive relief, compensatory damages, and attorney's fees. It sets a three-year statute of limitation from the date of discovery of the misappropriation.

A trade secret owner may apply for and a court may grant, in extraordinary circumstances, an ex parte seizure order to prevent dissemination of a trade secret if the court makes specific findings, including that: (1) a temporary restraining order or another form of equitable relief is inadequate, (2) an immediate and irreparable injury will occur if seizure is not ordered, and (3) the person against whom seizure would be ordered has actual possession of the trade secret and any property to be seized.

A court must take custody of and secure seized materials and hold a seizure hearing within seven days. An interested party may file a motion to encrypt seized material.

A party harmed by a wrongful or excessive seizure may move to dissolve or modify the order and may also seek relief against the applicant of the seizure order.

(Sec. 3) The bill increases the maximum penalty for trade secret theft (currently $5 million) to the greater of $5 million or three times the value of the stolen trade secret.

A court may not authorize or require the disclosure of information that an owner asserts to be a trade secret unless the court allows the owner to submit under seal a description of the interest in keeping the information confidential. Additionally, disclosure of information related to a trade secret in connection with a prosecution does not constitute a waiver of trade secret protection unless an owner expressly consents to such waiver.

It adds economic espionage and trade secret theft to the list of predicate offenses that constitute racketeering activity.

(Sec. 4) The Department of Justice must submit to Congress and publish a biannual report on trade secret theft outside the United States.

(Sec. 5) The bill expresses the sense of Congress that: (1) trade secret theft occurs in the United States and around the world, (2) trade secret theft harms owner companies and their employees, (3) the Economic Espionage Act of 1996 applies broadly to protect trade secrets from theft; and (4) it is important, when seizing information, to balance the need to address misappropriation with the needs of third parties and the accused party.

(Sec. 6) The Federal Judicial Center must develop, update, and submit to Congress best practices for seizing information and securing seized information.

(Sec. 7) The bill provides immunity from civil and criminal liability for an individual who discloses a trade secret: (1) to a government official or attorney in confidence to report or investigate a violation of law, or (2) in a legal complaint or filing under seal.

Written by the nonpartisan Congressional Research Service. All summary versions on Congress.gov